Retail Association Files Suit Against Maryland Health Insurance Law

The Retail Industry Leaders Association filed a federal suit in Baltimore on Tuesday arguing that Maryland's Fair Share Health Care Act is illegal under the Employee Retirement Income Security Act, the Baltimore Sun reports. ERISA in part is meant to ensure that large employers are subject to uniform national standards for their benefits plans, according to the Sun (Green/Rosen, Baltimore Sun, 2/8).

The Maryland law, enacted Jan. 12 when the state General Assembly overrode a veto of the legislation by Gov. Robert Ehrlich (R), will require employers with 10,000 or more employees to spend at least 8% of payroll costs on health care or contribute to a state fund for the uninsured. Wal-Mart is the only employer that the Maryland law affects (California Healthline, 1/17). The Maryland law is scheduled to go into effect on Saturday.

The RILA board, which includes a Wal-Mart executive, voted unanimously to file the suit. RILA argues that Wal-Mart would suffer irreparable damage from the law, giving it the legal standing to sue (Baltimore Sun, 2/8).

The lawsuit contends that state and local governments are not permitted to mandate levels of health care coverage by private companies (Wyatt, AP/Hartford Courant, 2/8). It also argues that Maryland's law unfairly singles out a specific company, violating the Equal Protection Clause of the U.S. Constitution (Wagner, Washington Post, 2/8).

The lawsuits request that an injunction be granted to prevent enforcement of the law (AP/Hartford Courant, 2/8).

RILA also filed suit Tuesday in Suffolk County, N.Y., challenging a similar law there that requires large grocery retailers to give workers a health care benefit worth at least $3 an hour (Washington Post, 2/8).

RILA President Sandy Kennedy said the Maryland and Suffolk County laws are "political gimmick[s]" and "hollow gestures that are inconsistent with federal policy."

Kennedy said, "These laws discourage business development and stunt growth" (Baltimore Sun, 2/8). She added, "We certainly hope that the other states ... will pause and look at what we're doing in Maryland and Suffolk County and consider that these are unwise and unlawful laws" (AP/Hartford Courant, 2/8).

Maryland Attorney General J. Joseph Curran (D) said, "We thought there would be a challenge to this, and we've been preparing for weeks." Curran said he remains confident in the law and said it does not regulate how health plans should be structured but rather imposes a tax on those that do not meet a certain standard for funding benefits (Washington Post, 2/8).

Wal-Mart spokesperson Dan Fogelman said the company supports the lawsuit but is not directly involved in it, aside from its membership in RILA. He added that he did not know whether the company would file friend-of-the-court briefs or take its own action. He said, "We share RILA's opinion that existing law states that employee benefits plans are regulated by the federal government and not by the states. We believe that the challenges facing our country's health system are national problems that require national solutions" (Baltimore Sun, 2/8).

Ehrlich spokesperson Henry Fawell said the lawsuit "underscores what everyone outside the Maryland General Assembly already knew: The Wal-Mart bill is terrible public policy that will now face serious legal scrutiny" (Washington Post, 2/8).

In related news, the U.S. Chamber of Commerce on Tuesday recommended that state legislatures not pursue legislation similar to Maryland's. The Chamber said that it backs the RILA lawsuit. Chamber President and CEO Tom Donohue said in a statement, "Targeting big companies with politically motivated health care mandates on a state-by-state basis is not only unfair, it is illegal," adding, "These bills may prompt other states to try their hand at setting national policy, but they do nothing to address our nation's mounting health care crisis" (CQ HealthBeat, 2/7).